Labour court can reconsider ex parte award that has become enforceable

In M/s Haryana Suraj Malting Ltd v Phool Chand, the legal question before the Supreme Court was whether the industrial tribunal/labour court is functus officio (i.e. having performed its office or rendered a decision, lacks any power to re-examine that decision) after an award becomes enforceable and is therefore prevented from considering an application for setting aside an ex parte award.

The Industrial Disputes (Central) Rules, 1957, framed under the Industrial Disputes Act, 1947 (IDA), provide that a court/tribunal can proceed ex parte where any party fails to attend the court/tribunal without sufficient cause being shown. The IDA provides that a labour award becomes enforceable on the expiry of 30 days from the date of its publication by the government.

In Sangham Tape Co v Hans Raj (2005), the Supreme Court held that an application for the recall of an ex parte award could be entertained by the industrial tribunal or labour court only if it was filed before the expiry of 30 days from the date of pronouncement or publication of the award. A contrary view was taken by Supreme Court in Radhakrishna Mani Tripathi v LH Patel and Anr (2009). To resolve the ambiguity, the matter was referred to a Supreme Court bench of three judges.

The Supreme Court held that there was no finality attached to an ex parte award and the tribunal had the power to deal with the application before it, and set aside the ex parte award and pass suitable orders. It observed that: “Merely because an award has become enforceable, does not necessarily mean that it has become binding. For an award to become binding, it should be passed in compliance with the principles of natural justice.”

The dispute digest is compiled by Bhasin & Co, Advocates, a corporate law firm based in New Delhi. The authors can be contacted at lbhasin@bhasinco.in or lbhasin@gmail.com. Readers should not act on the basis of this information without seeking professional legal advice.